In major retreat, Bright Health halts individual health insurance coverage

Bright Health Group will end individual and family health insurance coverage and reduce its Medicare Advantage coverage to just two states, a dramatic retreat for the Bloomington company that built a national presence in just five years.

The company, which attracted billions of dollars in investment capital and last year undertook Minnesota’s biggest IPO, has been under financial pressure from its fast growth and pandemic-related payouts.

Bright Health currently sells coverage on government-run exchanges in 15 states. But it said Tuesday it will no longer offer coverage in any of them beginning in January, effectively mothballing that line of business.

Bright also announced it will withdraw Medicare Advantage plan offerings in four states, leaving only California and Florida.

The company will decamp in January from individual health insurance markets in Alabama, Arizona, Colorado, Florida, Georgia, Nebraska, North Carolina, Texas and Tennessee — joining the previously announced withdrawal from Illinois, New Mexico, Oklahoma, South Carolina, Utah and Virginia. In a document footnote, Bright said there is a chance it may continue some individual plan coverage in California.

Bright Health said it will now focus on its non-insurance business. The company operates medical clinics that will be a part of its “fully aligned care model,” which integrates data and analytics aimed at delivering better value on aging and underserved patients in the company’s largest markets: California, Florida and Texas.

In a statement, the company said this reorganization offers a “faster path to profitability, has greater predictability, and is more capital efficient.”

Bright Health also announced a new infusion of cash, raising $175 million in “convertible preferred equity capital.” Executives told investors in August that there was “substantial doubt” the company could continue without raising more capital.

The company hasn’t posted a profit and, in the first six months of 2022, reported a net loss of $432 million.

Bright Health launched in 2016, one of many startups trying disrupt the business of health care. It began offering plans in Colorado, its first state, in 2017. Co-founder and original chief executive Bob Sheehy had previously been CEO of UnitedHealthcare, the health insurance arm of Minnetonka-based UnitedHealth Group.

As a startup, Bright Health raised more than $1.5 billion in financing, a record among Minnesota companies. It then raised more than $900 million in a listing on the New York Stock Exchange in June 2021, becoming the largest IPO of a Minnesota-based company.

But from an initial share price of $18, Bright Health shares have plunged and closed Monday at a new low of 91 cents.

News of Bright’s restructuring sent its stock up more than 30% and it was trading around $1.18 at midday.

Bright does not offer any health plans in Minnesota.

As of June, Bright Health had about 970,000 individual market enrollees and 120,000 people in Medicare Advantage plans.